Government borrowing falls to lowest level in 17 years thanks to a surge in tax receipts
Government borrowing has fallen to its lowest level in 17 years due to a surge in tax receipts.
The public sector borrowed £200million in February, lower than expected and significantly down on the £1.2billion borrowed the previous year.
It takes borrowing for this financial year so far to £23.1billion – a fall of £18billion from the same period a year earlier, and its lowest level since 2001-2002.
A a surge in tax receipts has given Chancellor Philip Hammond a war chest of more than £26bn which he can spend without breaking his fiscal targets
The improvement was largely driven by higher payments from income and capital gains taxes, which together brought in a total of £6billion last month.
Tax payments have beaten all predictions since the Brexit vote, triggering a dramatic improvement in the public finances.
It has given Chancellor Philip Hammond a war chest of more than £26billion which he can spend without breaking his fiscal targets – setting the stage for tax cuts or spending rises if a Brexit deal is struck.
Overall public debt stands at nearly £1.8trillion. This is equal to 82.8 per cent of the British economy, down from 84.2 per cent a year earlier.
Experts warned that borrowing could rise sharply if Britain leaves the EU without a deal.
John Hawksworth, chief economist at PwC, said: ‘All bets would be off in the case of a disorderly No Deal Brexit, which could push UK growth into negative territory, dampening tax revenue growth and widening the budget deficit significantly over the next few years.’